As the U.S. government has decided to revoke the "Validated End-User" (VEU) status previously granted to the Chinese factories of Samsung Electronics and SK Hynix, starting next year, both companies will be required to obtain individual permits for each import of equipment. Although this structure will make it impossible to expand production capacity or upgrade technology, some analysts suggest that the immediate impact will not be significant, given that the local factories have already been operating mainly with older-generation products.
According to the U.S. Federal Register on the 29th (local time), the U.S. Department of Commerce announced that it will abolish the comprehensive authorization that allowed Samsung Electronics and SK Hynix to supply U.S.-made semiconductor manufacturing equipment to their production facilities in China without having to obtain individual permits each time.
The U.S. Department of Commerce has stated that it will officially publish this in the Federal Register on September 2 (local time). The Bureau of Industry and Security (BIS) of the Department of Commerce announced that it will remove three Chinese corporations-Intel Semiconductor (Dalian), Samsung Semiconductor, and SK Hynix Semiconductor-from the list of "Validated End-Users" (VEU).
This measure will take effect 120 days after its official publication on September 2 (Eastern Time). As a result, starting in January next year, Samsung Electronics' Xi'an NAND plant and SK Hynix's Wuxi DRAM and Dalian NAND plants will have to obtain individual permits for each import of U.S.-made semiconductor manufacturing equipment. The Intel Dalian plant, now acquired by SK Hynix, will also be included as a Chinese production facility of a Korean company.
Consequently, from January next year, the Samsung Xi'an NAND plant and the SK Hynix Wuxi DRAM and Dalian NAND plants will no longer be able to import U.S.-made equipment without approval and will have to go through the approval process for every single case. The Department of Commerce stated, "Status quo will be allowed, but production expansion and technology upgrades will not be permitted."
The semiconductor industry does not expect this to immediately disrupt operations. The Samsung Xi'an plant and the SK Hynix Wuxi and Dalian plants are already running processes that are one to two generations behind their Korean headquarters, and the main strategic products are concentrated in domestic and U.S. production lines. In particular, next-generation products for artificial intelligence (AI) servers, such as high-bandwidth memory (HBM), are not produced in China.
Therefore, many experts assess that the direct impact of this measure on the global memory supply chain will be limited. An industry insider analyzed, "Considering the global strategies and business portfolios of Samsung and SK Hynix, the actual impact will be limited."
However, in the mid- to long-term, this could become a burden. If technological advancement is blocked, Chinese production bases may become fixed as sites for low-specification products over time, leading to a loss of competitiveness. The need to obtain individual permits for each equipment import also raises the risk of supply schedule disruptions due to approval delays. In fact, the Department of Commerce estimated that this measure would generate an additional 1,000 export license applications annually.
Some analysts also point to a political context. While the Trump administration recently extended the "tariff truce" with China and eased direct export controls to China, it did not make exceptions for the Chinese production bases of allied companies. There is also an interpretation that this move is intended to check South Korea's stance of relying on the U.S. for security and China for economic matters, known as "Anmikyungjung."
There is still room to delay the implementation or ease the severity of the measure through negotiations between South Korea and the U.S. during the remaining 120 days. In addition, the extent to which "status quo" will be allowed during actual implementation is seen as a key variable in determining the sustainability of Samsung and SK Hynix's business operations in China.
The Ministry of Trade, Industry and Energy explained regarding this measure, "We will actively discuss with the U.S. government ways to reduce the burden on our companies in terms of global supply chain stability."
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